Question 1

Which of the following is in accordance with IFRS?

Accepted Answer

A)  Accrual basis accounting 
B)  Cash basis accounting 
C)  Both accrual basis and cash basis accounting 
D)  Neither accrual basis nor cash basis accounting 
A)  Accrual basis accounting 
B)  Cash basis accounting 
C)  Both accrual basis and cash basis accounting 
D)  Neither accrual basis nor cash basis accounting

Question 2

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

Accepted Answer

A) True 
 B)False

Question 3

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

Accepted Answer

A) True 
 B)False

Question 4

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

Accepted Answer

A) True 
 B)False

Question 5

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

Accepted Answer

A) True 
 B)False

Question 6

On January 1, 2013, Masters and Masters Company purchased equipment for € 45,000. The company is depreciating the equipment at the rate of € 1,050 per month. The book value of the equipment at December 31, 2013 is

Accepted Answer

A)  € 0. 
B)  €12,600. 
C)  € 32,400. 
D)  € 45,000. 
A)  € 0. 
B)  €12,600. 
C)  € 32,400. 
D)  € 45,000.

Question 7

Speedy Clean Laundry purchased € 6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only € 1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Accepted Answer

A)  Debit Supplies Expense, € 1,000; Credit Supplies, € 1,000. 
B)  Debit Supplies, € 1,000; Credit Supplies Expense, € 1,000. 
C)  Debit Supplies, € 5,500; Credit Supplies Expense, € 5,500. 
D)  Debit Supplies Expense, € 5,500; Credit Supplies, € 5,500. 
A)  Debit Supplies Expense, € 1,000; Credit Supplies, € 1,000. 
B)  Debit Supplies, € 1,000; Credit Supplies Expense, € 1,000. 
C)  Debit Supplies, € 5,500; Credit Supplies Expense, € 5,500. 
D)  Debit Supplies Expense, € 5,500; Credit Supplies, € 5,500.

Question 8

Which of the following statements is false?

Accepted Answer

A)  GAAP uses the cash basis of accounting. 
B)  GAAP requires that revenue and costs must be capable of being measured reliably. 
C)  GAAP employs accrual accounting. 
D)  GAAP employs the time period assumption. 
A)  GAAP uses the cash basis of accounting. 
B)  GAAP requires that revenue and costs must be capable of being measured reliably. 
C)  GAAP employs accrual accounting. 
D)  GAAP employs the time period assumption.

Question 9

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 10

Prepare the necessary adjusting entry for each of the following:
1. Services provided but unrecorded totaled $900.
2. Accrued salaries at year-end are $1,000.
3. Depreciation for the year is $600.

Accepted Answer

The answer of Prepare the necessary adjusting entry for each...

Question 11

Wave Inn is a resort located in Canada. Wave Inn collects cash when guests make a reservation. During December 2013, Wave Inn collected $75,000 of cash and recorded the receipt by recognizing unearned revenue. By the end of the month Wave Inn had earned one third of this amount, the other two thirds will be earned during January 2014. The adjusting entry required at December 31, 2013 would impact the statement of financial position by

Accepted Answer

A)  Increased Equity $50,000. 
B)  Decreased Liabilities $25,000. 
C)  Increased Assets $75,000. 
D)  Decreased Equity $25,000. 
A)  Increased Equity $50,000. 
B)  Decreased Liabilities $25,000. 
C)  Increased Assets $75,000. 
D)  Decreased Equity $25,000.

Question 12

Cara, Inc. purchased supplies costing ₤3,500 on January 1, 2014 and recorded the transaction by increasing assets. At the end of the year ₤1,300 of the supplies are still on hand. How will the adjusting entry impact Cara, Inc.'s statement of financial position at December 31, 2014?

Accepted Answer

A)  Decreased Assets ₤ 1,300. 
B)  Increased Equity ₤ 1,300. 
C)  Increased Liabilities ₤ 2,200. 
D)  Decreased Assets ₤ 2,200. 
A)  Decreased Assets ₤ 1,300. 
B)  Increased Equity ₤ 1,300. 
C)  Increased Liabilities ₤ 2,200. 
D)  Decreased Assets ₤ 2,200.

Question 13

In an adjusted trial balance, all assets and liabilities reported on the statement of financial position are properly stated.

Accepted Answer

A) True 
 B)False

Question 14

Bread Basket provides baking supplies to restaurants and grocery stores. On November 1, 2014, Bread Basket signed a €500,000, 6-month note payable. The note requires Bread Basket to pay interest at an annual rate of 6%. Assuming Bread Basket makes the appropriate adjusting entry, what is the impact on its December 31, 2014 statement of financial position?

Accepted Answer

A)  An expense of € 15,000. 
B)  An expense of € 5,000. 
C)  A liability of € 5,000. 
D)  An expense of €15,000 and a liability of.€15,000. 
A)  An expense of € 15,000. 
B)  An expense of € 5,000. 
C)  A liability of € 5,000. 
D)  An expense of €15,000 and a liability of.€15,000.

Question 15

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

Accepted Answer

A) True 
 B)False

Question 16

Accrued revenues are revenues that have been earned and received before financial statements have been prepared.

Accepted Answer

A) True 
 B)False

Question 17

On June 1, during its first month of operations, Soufflé Masters purchased supplies for $3,500 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for June?

Accepted Answer

The answer of On June 1, during its first month...

Question 18

If business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit

Accepted Answer

A)  cash. 
B)  prepaid rent. 
C)  unearned rent revenue. 
D)  accrued rent revenue. 
A)  cash. 
B)  prepaid rent. 
C)  unearned rent revenue. 
D)  accrued rent revenue.

Question 19

Unearned revenues are

Accepted Answer

A)  received and recorded as liabilities before they are earned. 
B)  earned and recorded as liabilities before they are received. 
C)  earned but not yet received or recorded. 
D)  earned and already received and recorded. 
A)  received and recorded as liabilities before they are earned. 
B)  earned and recorded as liabilities before they are received. 
C)  earned but not yet received or recorded. 
D)  earned and already received and recorded.

Question 20

Financial statements can be prepared from the information provided by an adjusted trial balance.

Accepted Answer

A) True 
 B)False

Which of the following is in accordance with IFRS?

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

On January 1, 2013, Masters and Masters Company purchased equipment for € 45,000. The company is depreciating the equipment at the rate of € 1,050 per month. The book value of the equipment at December 31, 2013 is

Speedy Clean Laundry purchased € 6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only € 1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Which of the following statements is false?

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

Prepare the necessary adjusting entry for each of the following: 1. Services provided but unrecorded totaled $900. 2. Accrued salaries at year-end are $1,000. 3. Depreciation for the year is $600.

Cara, Inc. purchased supplies costing ₤3,500 on January 1, 2014 and recorded the transaction by increasing assets. At the end of the year ₤1,300 of the supplies are still on hand. How will the adjusting entry impact Cara, Inc.'s statement of financial position at December 31, 2014?

In an adjusted trial balance, all assets and liabilities reported on the statement of financial position are properly stated.

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

Accrued revenues are revenues that have been earned and received before financial statements have been prepared.

On June 1, during its first month of operations, Soufflé Masters purchased supplies for $3,500 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for June?

If business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit

Unearned revenues are

Financial statements can be prepared from the information provided by an adjusted trial balance.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting and Financial Reporting for Contingent Liabilities and Leases

Filters

Exam 3: Adjusting the Accounts

Which of the following is in accordance with IFRS?

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

On January 1, 2013, Masters and Masters Company purchased equipment for € 45,000. The company is depreciating the equipment at the rate of € 1,050 per month. The book value of the equipment at December 31, 2013 is

Speedy Clean Laundry purchased € 6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only € 1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Which of the following statements is false?

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

Prepare the necessary adjusting entry for each of the following: 1. Services provided but unrecorded totaled $900. 2. Accrued salaries at year-end are $1,000. 3. Depreciation for the year is $600.

Cara, Inc. purchased supplies costing ₤3,500 on January 1, 2014 and recorded the transaction by increasing assets. At the end of the year ₤1,300 of the supplies are still on hand. How will the adjusting entry impact Cara, Inc.'s statement of financial position at December 31, 2014?

In an adjusted trial balance, all assets and liabilities reported on the statement of financial position are properly stated.

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

Accrued revenues are revenues that have been earned and received before financial statements have been prepared.

On June 1, during its first month of operations, Soufflé Masters purchased supplies for $3,500 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for June?

If business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit

Unearned revenues are

Financial statements can be prepared from the information provided by an adjusted trial balance.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting and Financial Reporting for Contingent Liabilities and Leases

Filters